Pinduoduo’s stock experienced a dramatic selloff after the e-commerce giant released quarterly results that revealed a significant growth slowdown, triggering intense market reaction.
Revenue Growth Hits Historic Low
The company reported total revenue of $15.2 billion for the third quarter of 2025, representing a mere 9% year-over-year increase. This marks the slowest growth pace in Pinduoduo’s history as a former high-flyer in the e-commerce sector. While adjusted net profit climbed 14% to 31.38 billion yuan and earnings per share of 21.08 yuan exceeded projections, the overall revenue of 108.28 billion yuan fell short of market expectations.
Most concerning to investors was the performance of the core online marketing business, where revenue expansion slowed to just 8% compared to 13% growth in the previous quarter. This represents the first time this crucial segment has dropped to single-digit growth rates.
Profitability Metrics Show Strain
Rising operational costs are compounding the pressure from slowing revenue growth. Intensifying competition within the e-commerce sector is forcing Pinduoduo to increase marketing expenditures and merchant incentives. The consequence: operating profit expanded by only 3% during the past quarter.
The operating margin contracted significantly from 28% at the beginning of the year to the current 22%, signaling clear pressure on the company’s profitability trajectory.
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Market Analysts React to Earnings
Financial institutions issued varied responses to the quarterly performance:
- BofA Securities maintained a Neutral rating while slightly reducing their price target from $141 to $140
- Macquarie continues to recommend Outperform despite trimming their target from $165 to $162
- CMBI reaffirmed its Buy recommendation and actually raised its price objective to $154.30
Despite these divergent adjustments, the consensus recommendation remains “Buy” with an average price target of $148.41. Market reality tells a different story, with the stock declining 13.6% during the week following the earnings release.
Global Expansion Faces Headwinds
Co-CEO Chen Lei highlighted increasing international challenges, citing trade conflicts, taxation issues, data privacy regulations, and product compliance requirements as complicating factors for global expansion. These uncertainties are impacting both near-term performance and long-term strategic positioning.
While management emphasizes long-term value creation through ecosystem investments, repeated growth warnings are testing investor patience. The company faces competitive pressure on multiple fronts: domestic rivals Alibaba and JD.com in China, while Douyin and other livestreaming platforms capture market share. Internationally, Temu confronts established players like Amazon, which is expanding its discount offerings and accelerating delivery times.
The stock plummeted more than 7% immediately following the earnings announcement. A minor recovery occurred on Friday with shares edging up 0.275% to close at $113.24, but this stabilization appears fragile with the downward trend remaining firmly intact.
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